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Dow Ends Week With A Whimper

More worries related to fragile overseas economies hung over Wall Street like a nagging illness Friday, capping a frustrating week in which blue-chip stocks managed just one winning outing.

The Dow Jones Industrial Average declined 34.50 points, or 0.4 percent, to 8,425.00. The scope of the Dow's decline was deceiving, however. Without a big gain in J.P. Morgan, the index would have been off about 69 points.

On the week, the Dow sank 173.02 points, or 2.0 percent. It was the index's fourth consecutive weekly decline, its worst weekly streak since falling for five weeks in a row in March and April of 1997.

On the year, the Dow is up 516.75 points, or 6.5 percent, following gains of 33 percent, 26 percent, and 22 percent, in 1995, 1996, and 1997, respectively.

On next week's slate, the Federal Reserve's Federal Open Market Committee meets Tuesday, as it does every six to eight weeks, to discuss possible changes in interest rate policy. Virtually no one on Wall Street expects the central bank to raise rates, however, what with a moderate-growth U.S. economy and a benign inflationary environment.

Too, a rate hike would only accelerate the urgency with which global investors are deserting foreign currencies, notably the Japanese yen.

The financial community is particularly concerned that a further fall in the yen against the U.S. dollar may push other Asian nations, especially China and Hong Kong, to devalue their own currencies to remain price competitive.

Such a move would make domestically produced goods and services less competitive vs. their foreign counterparts, and would pressure U.S. corporations to lower prices, squeezing profit margins in the process.

"I think the market is in a price correction and not a bear market," said Alan Skrainka, market analyst at Edward Jones. "If you look at the Dow, a 10 percent pullback has a one-in-four chance of becoming a 20 percent bear market decline. That shows that if you sell stocks today, you have a 75 percent chance of being wrong."

Overseas, Hong Kong's Hang Seng stock index shot up 8.5 percent after the Hong Kong Monetary Authority intervened to support share prices by buying stocks and futures contracts.

Russian stocks also were triumphant, with the benchmark stock index running up 13.7 percent. President Boris Yeltsin said Russia would not devalue the ruble. But Friday's news that Russia's 15th-largest bank shut its doors once again cast a cloud over that nation's financial system.

In the bond market, a flight-to-quality rally took hold in light of the news surrounding Imperial Bank.

The 30-year Treasury advanced 22/32, to yield 5.543 percent, a record low since the government began regularly issuing the long bond in 1977. See Bond Report.

The Standard & Poor's 500 Index fell 1.1 percent.

New York Stock Exchange losers held sway over winners by 16 to 13.

On the Big Board floor, turnover eased 3.6 percent.

The Nasdaq Composite decline0.7 percent. Declining issues led advancers by 23 to 18 in the Nasdaq Stock Market. Volume totaled 657 million shares.